Prime Minister John Key says New Zealanders will be prioritised for Mighty River Power shares and if there's enough interest they could squeeze out foreign buyers altogether.

The Australian Financial Review reported today that Australian and other overseas investors were set to be offered up to 30 per cent of shares in the state-owned company.

A milestone was reached today when 400,000 New Zealanders pre-registered their interest in buying shares when a 49 per cent stake goes on the market later this year.

The Government has said throughout that 85 per cent to 90 per cent of shares would be held by New Zealanders, including the Government's 51 per cent shareholding. That suggests about 70 per cent of the stake about to go on the market will be held by New Zealanders and the rest may go offshore.

But Key indicated today the Kiwi shareholding could go even higher.

"Our intention is to put New Zealanders at the front of the queue," he said.

"My view is that's got to be no less than 85-90 per cent held by New Zealanders.

"I'm sure there may well be interest from Australian institutions and Australian individuals but in the end we've seen 400,000 New Zealanders pre-registering. They'll be at the front of the queue as will New Zealand institutions."

Asked why any shares would go to Australians when so many New Zealanders had shown an interest, Key said they might not.

"In the end those New Zealanders will be prioritised," he said.

"If that means there's no room for anyone else, there's no room for anyone else."

Mighty River Power is the first of several state-owned businesses in which the Government intends selling a stake.